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Investors are debating if the burgeoning deflationary pressures in the U.S. will keep the Federal Reserve from raising rates later this year. A quiet consensus is emerging that the Fed will back off because lower oil prices will introduce deflationary pressures.

But UBS has a different view. In a note to clients, UBS EconomistMaury Harris said falling oil prices and the European Central Bank’s decision to commence a quantitative easing program raises his conviction that the Fed will raise the federal funds rate this summer.

UBS expects the first Fed move at the June 17 Federal Open Market Committee meeting, and anticipates a 13/8% Federal Funds rate at year-end. As Harris writes:

So far this year, lower crude oil prices apparently have been engendering more anxiety than optimism about the US economy. That said, various Fed communications, including the minutes of the Dec. 16-17 FOMC meeting, agree with our assessment that lower crude oil prices are a net growth benefit for an economy such as the US, which still is a net importer of petroleum products. And continued healthy economic growth is one of the prerequisites for Federal funds rate tightening this year. To be sure, there are uncertainties about the collateral domestic damage stemming from the reeling US oil and gas sectors. However, the more than $1.00 per-gallon drop in retail gasoline prices over recent months effectively has been an over $100 billion tax cut for US households. Even if lower oil prices mainly reshuffle domestic incomes and spending to household consumption from oil and gas producers’ capex, there still would be a net benefit to the US economy via less money leaving the country to pay for petroleum imports. Last year, the net petroleum US trade deficit was an estimated $110 billion. If that is halved, with a 50% drop in crude oil prices, the related extra $55 billion savings remaining in the US is equivalent to around 0.3% of current dollar GDP In addition to the domestic growth stimulus from lower imported crude oil prices, another factor supporting Federal funds rate tightening this year is the $1.3 trillion in QE recently announced by the ECB. The related purchases of European fixed-income securities undoubtedly will keep longer-term Treasury note and bond yields and related mortgage rates lower than they would have been otherwise. This should make the Fed less worried about what a higher Federal funds rate and related money market rates could do to mortgage rates for the critical housing sector. In other words, a related flatter-than-otherwise yield curve makes the housing industry less sensitive to Federal Funds rates tightening.

U.S.-listed shares of some big Swiss companies were rising Thursday morning as a surprise move by Switzerland’s central bank sent stocks there reeling and the Swiss franc soared against the euro and the U.S. dollar.

The Swiss National Bank ditched a three-year-old cap against the euro and then immediately introduced negative interest rates on overnight bank deposits. The so-called “Swiss shocker,” initially sent European and U.S. stocks falling, though markets here did reverse. The benchmark Swiss stock index fell 11%.

In the U.S., however, the iShares MSCI Switzerland Capped ETF (EWL) rose almost 5% in premarket action.

Shares of Credit Suisse Group (CS) climbed 3.7% to 23.66 and UBS Group (UBS) climbed 2.5% to $16.89.

Switzerland’s central bank has faced challenges controlling the value if its currency. The rising franc puts pressure on Switzerland’s exports, particularly to the European Union, which accounts for more than half of the country’s exports. As the Wall Street Journal explains:

The SNB’s decision to abandon the 3½-year-old cap on the franc follows months of relentless pressure on the currency, a traditional haven in times of geopolitical and economic uncertainty. Crises from the conflict in Ukraine to political drama in Greece have all prompted investors to buy franc-denominated assets. Even the SNB’s surprise announcement in December that it would introduce negative interest failed to produce more than a temporary respite in the franc’s strength.

The SNB’s move Thursday comes ahead of a potential large-scale bond-buying program from the European Central Bank—widely expected to be announced later this month. A program of quantitative easing from the ECB would put further downward pressure on the euro, making the SNB’s floor extremely tough to maintain.

The biotech rally has been good to Celgene (CELG), which has soared more than 160% over the last two years. But UBS sees the stock returning another 21% over the next 12 months.

In a note published Thursday morning, analyst Matthew Roden and his team upgraded Celgene to a Buy from a Neutral and set a $200 price target, citing their conviction that the drug maker can deliver 26% average annual EPS growth over the next four years.

Celgene makes drugs that treat blood cancers. It is working to expand use of its blockbuster treatment Revlimid to include newly diagnosed multiple myeloma patient. Initial data from a pivotal study released last month showed Revlimid prolonged patient life. The full-data gets unveiled at a medical meeting this weekend. If the data is free of controversy, then Revlimid will ”be out of the woods in terms of clinical and regulatory risk,” wrote Roden.

Add to that, other pipeline possibilities and expanding margins, and Roden sees upside to the Street’s current per share earnings estimates, as well as Celgene’s own financial goals. In January, the company said it aims to earn between $13 a share to $14 a share in 2017.

Roden raised his 2014 and 2015 per share earnings estimates to $7.55 and $10.25 respectively, up from the previous $7.25 and $9.30 forecasts.

Apply that 2015 earnings estimate to Roden’s $200 price target, and that puts Celgene at 19.7 times earnings, a big jump from the current price-to-2015 earnings ratio of 16.2. Roden writes:

We are now less concerned about the valuation of CELG in the context of large cap growth investments elsewhere. Indeed we find CELG compares favorably to other names in healthcare and the broader markets on the basis of EPS growth (26% vs 16% HC and 13% S&P500), and operating margin (49% vs 13% and 16% in 3Q13, and 60% achievable for CELG by 2017). Hence we think a premium multiple is warranted.

General Motors (GM) and Ford (F) both have compelling valuations. UBS analyst Colin Langan, however, sees preferences on the Street shifting towards GM, arguing that the U.S. auto giant has more positive catalysts over the next six months.

In a note published today, Langan writes:

…GMNA margins should benefit from the full-size pickup ramp up, with margins likely peeking in Q2 or Q3 post the Q1 heavy duty and SUV launch. Moreover, it is increasingly likely that GM will return cash to shareholders given excess liquidity and recent management comments.

It’s an opinion Barrons.com shares. Last month, Senior Editor Dimitra Defotisweighed in bullishly on General Motors after the company reported that EBITDA generated during the third quarter beat expectations and showcased strong North America vehicle sales, especially trucks.

But that’s not to say we haven’t take Ford for a drive. In June, another Barrons.com colleague, Teresa Rivas said Ford was in the fast lane, arguing that strong vehicle sales demonstrated that the automaker was primed for gains.

Today, shares of GM rose 0.2% to $37.71, after rising roughly 54% over the last 12 months. Ford, meanwhile, rose a similar pace over the last year. Today, the shares fell 0.32% to $16.95.

But UBS’s Langan predicts that 2014 will be a transition year for Ford as it launches its new full-size pick-up truck next summer. That means rising costs, at the same time GM trucks will be increasingly available, allowing the company to pressure Ford’s market share and pricing.

Langan added:

While we expect improved profits in Europe, the close to $1bn in savings from the Genk plant closure will largely be a 2015 benefit as it closes near 2014-end. That said, Ford is setting up for an unprecedented 2015 given the new F-150 pickup launch and EU restructuring savings. The new pickup will reportedly have dramatic styling changes and include more aluminum content, which should result in superior fuel economy and performance relative to peers.

Goldman analysts, led by Chief U.S. Equity Strategist David Kostin, have said several sectors are sensitive to rising treasury yields including financial stocks, in a recent report.

Other big names suffered even sharper declines as other bad news weighed in on share prices.

Bank of America (BAC) dropped 2.6% to $13.3 amid opposition from American International Group (AIG) and others to its proposed an $8.5 billion settlement with investors over soured mortgage securities.

A hearing is slated for today in New York State Court.

Wells Fargo & Co. (WFC) fell 1% to $40.18 after CEO John Stumpf, told the Financial Times that the Federal Reserve is giving mixed messages about how much long-term debt banks need to hold. He added that changing the capital requirements could hurt banks.

And the WSJ reported Saturday that officials in France are putting Swiss banking giant UBS (UBS) under formal investigation as part of a probe into whether it tried to help wealthy Frenchmen evade taxes.

The overwhelming majority of big investment banks saw revenues fall across nearly all of their business lines in the first half of 2012.

That’s according to new data out from Coalition, which carried out the analysis of first-half revenues at 10 global investment banks.

The Coalition Index measures the performance of 10 banks: Bank of America (BAC), Barclays (BCS), Citi (C), Credit Suisse (CS), Deutsche Bank (DB), Goldman Sachs (GS), JP Morgan (JPM), Morgan Stanley (MS), Royal Bank of Scotland (RBS) and UBS (UBS). It found that the banks’ revenues declined 7.5% to $86 billion in the first six months of 2012, down from $93 billion year-over-year, as 10 out of their 13 largest business units recorded drops. Credit, commodities, equity derivatives and debt capital markets all experienced double digit declines.

The only two other business areas to experience increased revenues were prime services in equities, (+2.2% to $5.6 billion), and global emerging markets within fixed income, (+2% to $8.3 billion).

This may spell bad news not only for investors but employees as well: Analysis by Dow Jones’ Financial News of eight large investment banks found that investment banking jobs fell by around 100,000, or 5.6%, in the last year.

UBS (UBS) said today that it lost about $359 million (349 Swiss francs) related to the Facebook (FB) IPO, as the bank received many more shares than it had ordered. Nasdaq (NDAQ) has acknowledged mistakes in the IPO, as the start of trading was delayed and traders were initially uncertain whether their orders had gone through. Facebook is down 6.2% today, hitting a new low. UBS is off 5.3%.

It’s not yet clear how much UBS will attempt to recover. The company detailed what it called Nasdaq’s “gross mishandling” of the IPO in a statement.

“Due to the gross mishandling of Facebook’s market debut by NASDAQ we recorded a loss of CHF 349 million in our US Equities business as a result of our efforts to provide best execution for our clients. As a market maker in one of the largest IPOs in US history, we received significant orders from clients, including clients of our wealth management businesses. Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirmed for several hours after the stock had commenced trading. As a result of system protocols that we had designed to ensure our clients’ orders were filled consistent with regulatory guidelines and our own standards, orders were entered multiple times before the necessary confirmations from NASDAQ were received and our systems were able to process them. NASDAQ ultimately filled all of these orders, exposing UBS to far more shares than our clients had ordered. UBS’s loss resulted from NASDAQ’s multiple failures to carry out its obligations, including both opening the Facebook stock for trading and not halting trading in the stock during the day. We will take appropriate legal action against NASDAQ to address its gross mishandling of the offering and its substantial failures to perform its duties. Although as in all such matters there can be no assurance as to the amount of any recovery we may obtain, we intend to pursue compensation for the full extent of our losses.”

UBS is also hurting because of the European debt crisis and recession. Its investment banking division lost 130 million Swiss francs overall. The bank also cut 700 jobs in the quarter.

Actions to shore up European credit appear to be having the desired effect.

“The most dramatic shift in market conditions has been the result of central bank actions including LTRO, increased swap lines to the ECB and an extension of the Fed’s “low rate” promise. Nearly 100% of the recent run can be attributed to multiple expansion on the back of these actions, with the market’s P/E moving to 12.6x from 10.2x. We believe multiples can drift higher.”

Golub notes that the market has risen on an expansion in price to earnings multiples, but analysts’ forward earnings expectations have stayed just about flat. He expects that to change.

“A number of recent trends have emerged which should support stronger corporate profits including (1) better U.S. economic data; (2) less severe results in Europe; (3) higher oil prices (a positive at current levels); and (4) reduced financial sector stress.”

Financial stocks were falling in pre-market trading as Moody’s said it is considering severe downgrades to numerous large banks. Morgan Stanley (MS), Credit Suisse (CS), and UBS (UBS) could all see their credit ratings fall as much as three notches, and more than 100 other banks could also get hit with downgrades, the ratings agency said. Capital markets are still in turmoil, Moody’s noted, and banks are facing all sorts of challenged, including strict new regulations and wide credit spreads. Morgan Stanley fell 2% in pre-market trading.

The Moody’s warning, and continuing uncertainty in Greece, overshadowed another strong weekly jobless claims report showing claims fell to 348,000, the lowest level since March 2008.

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The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.